Perth groups buy Melbourne offices

A Perth-based joint venture has bought two office buildings in ­Melbourne’s inner east for just under $30 million.

Property Bank Australia and Security Capital Corporation paid $11.3 million for 630 Church Street, Richmond. The deal represents a yield of about 7 per cent.

Colliers International investment services director Peter Bremner said factors including rent-free periods and expected rent reversions over the next two years meant the market yield was above 9 per cent.

The property has an area of 3184 square metres over its three ­levels, basement parking for 72 cars and was sold fully leased to three ­tenants.

Mr Bremner brokered the deal on behalf of a Melbourne family ­company.

“The purchaser saw great upside in the rents and the scope to improve the yield over the short to medium term," he said.

The sale represents the joint venture’s second purchase in the area in recent months, following its acquisition of Building 8, 658 Church Street, Richmond.

The joint venture paid $18.35 million for the property last October, its first acquisition in Melbourne for several years.

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Property Bank Australia director Sandy Mackellar said: “We are ­positive about the fundamentals of the Melbourne office market over coming years and will continue to seek appropriate opportunities over the next 12 months. Whilst the Melbourne office ­market has already had a rebound in values, we believe the timing is still cyclically sound for this sort of investment."

PBA/SCC sold down over 70 per cent of their portfolio from 2006 through to 2007, leaving it with a large war chest.

They have since been hunting for new acquisitions over the past 12 months as part of a strategy to increase their exposure to the Sydney and Melbourne office markets ­following the financial crisis.

The Richmond deals represent the largest transaction since the joint venture bought 8 West Street, North ­Sydney, from Becton for about $20 million at the beginning of 2010.

Mr Bremner said investor demand was strong for high-quality office assets in Melbourne’s city fringe.

He said Richmond was the flagship suburb of the city fringe and accounted for the majority of office tenant demand.

“The city fringe office market is the most sought-after market for tenants and investors in metropolitan ­Melbourne," he said.

“This is predominantly due to its proximity to the CBD, public ­transport networks, access to major freeways, and outstanding tenant amenity.